US job growth expected to accelerate with strong wage gains

Amazingly he was right about some things and wrong about the big one- Public Domain

Amazingly he was right about some things and wrong about the big one- Public Domain

The strong jobs market is gradually putting upward pressure on compensation, with other data Wednesday showing a solid increase in labor costs in Q-3. Wages and salaries, which account for about 70% of total compensation, rose 3.1% from a year earlier for private-sector workers. "Wage growth is likely to be over 3 percent again soon". Sustained labour market strength could ease fears about the economy's health following weak housing data and stalling business spending.

That may be one reason employers who can find qualified candidates have to pay them more.

Last month, employment in the leisure and hospitality sector likely rebounded after declining by 17,000 jobs in September, the first drop in year.

Employment gains averaged 218,000 jobs per month over the past three months, double the roughly 100,000 needed to keep up with growth in the working-age population.

With 3.7 percent unemployment, some economists view the jobs market as being close to or at full employment. Economists believe that the Labor Department numbers will show employers added 190,000 jobs. Payrolls increased by 134,000 in September, the fewest in a year.

Prices also have been rising in the past year, especially for gas and rent, but wages are outpacing inflation by a significant margin.

The data comes as the Labor Department revealed that job growth in the month of September retreated to its lowest level in the past 12 months, while the unemployment rate fell to its lowest level in nearly 50 years. There were a record 7.1 million job openings in the economy in August, compared with only some 6.2 million unemployed. The report shows consumers who live in the South enjoyed the strongest job growth, while those in the West saw their paychecks grow the most. The ECI is widely viewed by policymakers and economists as a reliable predictor of core inflation.

The rise has some economists anxious higher inflation may not be far behind. They were up 2.6 percent in the 12 months through September after rising 2.9 percent in the year to June.

Americans boosted their spending by the most in almost four years in the July-September quarter. That's the biggest increase since September 2008.

"The report shows a booming US economy with a sufficient whiff of wage inflation to keep the Fed on track to raise rates in December and at least twice next year", said David Kelly, chief global strategist at JPMorgan Funds in NY. The services sector did the most hiring, with the biggest expansion coming in trade, transportation, and utility companies.

To combat increased employment costs, employers have been looking to non-salary measures like insurance and benefits packages to retain workers, but may have to start increasing wages to attract and retain talent going forward.

Information for this article was contributed by Heather Long of The Washington Post; by Christopher Rugaber of The Associated Press; and by Shobhana Chandra of Bloomberg News.

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